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untries or regions there are trade barriers in place to limit the volume of imports into the country. Sometimes, the most effective way to bypass these barriers is for a company to set up production in the targeted country. There might also be laws and regulations in a country, put in place to limit the volume of imports into the country, and an FDI is the only option available to penetrate the market.This concludes that governmental implications have an influence on FDI, with a lot of barriers and restriction this influence is negative.

2.2.4.4Tax

The literature remains fairly uncertain regarding whether FDI may be sensitive to tax incentives. Some studies have shown that host country's corporate taxes have a significant negative effect on FDI flows. Others have reported that taxes do not have a significant effect on FDI. Hartman (1994), Grubert and Mutti (1991), Hines and Rice (1994), Loree and Guisinger (1995), Cassou (1997) and Kemsley (1998) find that the host country's corporate income taxes have a significant negative effect on attracting FDI flows. However, Root and Ahmed (1979), Lim (1983), Wheeler and Mody (1992), Jackson and Markowski (1995), Yulin and Reed (1995), and Porcano and Price (1996) conclude that taxes do not have a significant effect on FDI. Swenson (1994) reports a positive correlation. The direction of the effects of the above-mentioned determinants on FDI may be different. A variable may affect FDI both positively and negatively. For example, factors such as labour cost, trade barriers, trade balance, exchange rate and tax have been found to have both negative and positive effects on FDI.

The elements of the overall policy framework are economic freedom and political stability, as well as regulations controlling the entry and operations of multinational corporations. Business facilitation is represented by the administrative procedures, FDI promotion (e.g. facilitation services) and FDI incentives (Dunning, 1998). This political stability is not relevant for this case study as the study concerns FDI between two developed countries, with quite similar stability and tax systems. This is also mentioned by Galan and Benito-Gonzales (2007).The previous literature shows the impact of government policies, including investment incentives, on FDI inflows into a host country (Dunning, 2002). Though investment incentives are considered another determinant for FDI, the recent paper by Blomstrom and Kokko (2003) suggests that investment incentives alone are generally not an efficient way to increase FDI.

2.2.5 Cultural & social factors

This paragraph contains the last location factors that could influence the location choice, the determinants that are reviewed are culture and the quality of life.

2.2.5.1 Culture

When a company decides to invest in a host country the cultural distance between the countries is important to recognise. Research shows that if the host country culture is similar to the entrants culture, the entrant already have valuable information on how to behave on the new market, and the opposite if the culture differs in many areas (Makino, 2004). Moreover, Calhoun (2002) means that attention when choosing 本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。